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Fixed Odds Betting Terminals

Fixed Odds Betting Terminals Guide (FOBTs)

fixed_odds_betting_terminal_being_played_in_a_betting_shopFixed odds betting terminals have been placed in the shops so that some customers would continue to spend time and money in offline gambling. They have however been at the centre of controversy with many believing they are targeting particularly vulnerable customers and are prone to addition.

FOBT Stake Limits Reduced To £2 From October 2019

The UK government has reviewed the FOBT issue and decided that from October 2019 Fixed Odds Betting Terminals will have a maximum reduced stake from £100 to £2 per hand. Initially, the implementation was set from April 2019 but in the 2018 budget, the government moved it to October 2019. At the same time, the point of consumption tax will raise at 21% on games of chance online to cover for the shortfall.

Even though this decision wasn’t popular with operators, it is not surprising that was made. Bets take in betting shops are continuing to drop as more people are moving online. The decline of betting shops was covered up with the increase generated from FOBTs.

It is now almost certain that a huge number of the betting shop will close as operators are estimating the loss from FOBTs to be in the region of £200 million every year.

Online betting, on the other hand, is clearly booming, and it is possible to play games that are available on the FOBTs even with higher stakes. So, even if in the short term this will have an impact, in the long run, it will help the gambling industry to improve their reputation.

If you want to know more about FOBT’s and their controversial history, keep reading.

What Are Fixed Odds Betting Terminals?

FOBTs stands for Fixed Odds Betting Terminals and are computers that allow customers to place wagers on events that have fixed odds. In short, they are like electronic slot machines that allow players to have games like roulette. They can also simulate bingo, football, horse racing and so on.

If you go to a betting shop and look at Fixed Odds Betting Terminal you will see a percentage call RTP. This is the ‘Return To Player’ and indicates how much winnings on average the machine is paying back to customers. So if the percentage is 94% it means that for every pound you spend on the machine you will get back 94 pence (on average).

This sounds good on paper, however, there isn’t a limit to how much it will take for the 94% to go back to players: so someone can lose most of the time while another one can win immediately and so on. It is all based on probability.

The main appeal to players is that they are quick and also know they can get an immediate payout. If you are going to bet on a football event or a horse race, you would have to wait sometime to know if you have won or lost.

Are All Fixed Odds Betting Terminals Similar?

The short answer is that more or less they are the same. Some games might be different from bookmaker to bookmaker and FOBT’s are down to different categories:

Category B2 – Those have a maximum stake of £100 (which will be reduced to £2 from October 2019) and a maximum payout of £500.
Category B3 – the same maximum payout of £500 but maximum stake of just £2.
Category C – Maximum stake of £1 are available in commercial clubs, pubs and so on.

The Beginning Of FOBTs

Fixed Odds Betting TerminalsThe FOBTs were launched in the UK in 1999 but at the time they had a minimal number of games and higher margins. Due to that their popularity was low as punters knew the house was getting a far too big cut.

When the gambling taxes were over the bookies were able to lower the margins and still make a profit: they installed better games and the popularity of Fixed Odds Betting Terminals started to increase. By April 2005 there were more than 20,000 terminals in Britain.

How FOBTs Have Changed The UK High Street

The explosion in popularity of Fixed Odds Betting Terminals has given the bookmakers a reason to open more shops in the UK high street. Companies could only have a maximum of 4 terminals in every shop so to make more profits they had to open a new one.

As a result of FOBTs, the average amount bet in shops between 2004 and 2012 rose by 50%. Every betting terminal does bring on average £50,000 in profit which means that with 4 in it, the profit was in the region of £200,000 per shop. This just from FOBTs without any single traditional bet being placed. This is why despite the explosion of online betting, bookmakers have been able to keep betting shops to a stable 9,000 for the last decade.

Why Are FOBTs Are So Controversial?

moneyMany have defined Fixed Odds Betting Terminals as the ‘crack cocaine of the betting industry’. The UK government started to investigate them in 2017 before coming with the new legislation. Even though FOBTs are only used by 4% of the UK population, they provide bookies (and the government via tax) a considerable slide of profit.

Controversies

The most controversial aspect of FOBTs is the speed at which wagers can be placed. Every twenty seconds you can place a bet and with a £100 maximum stake per bet you could potentially burn £300 every minute. In just one hour you could have spent £18,000. This is the reason why they are so profitable in a range of £1.8 billion to £13.7 billion every single year.

There have been some studies that have shown that lots of punters have lost an enormous amount of money in a very short time. This is why they have been called ‘crack cocaine’: GambleAware has presented cases of seven people who lost more than £10,000 in a single day with some that lost more than £13,700 in just 7 hours.

Fixed Odds Betting Terminals Limits

Lots of gambling addictions charities have been campaigning to put pressure on the UK Government to stop Fixed Odds Betting Terminals. They didn’t succeed in getting those banned, but surely they have reached a great result since the maximum stake will go down from £100 to £2.
On the other hand, the government will lose around £400 million in tax and as many as 20,000 jobs could be at severe risks around the UK due to betting shops reduction.

What Is The Future Of FOBTs

fobt_bet_limitsThe decision to reduce the limit to £2 on Fixed Odds Betting Terminal from October 2019 has now been taken. Despite some criticisms also the major bookmakers agreed that the situation was so toxic that something had to be done.

Money Laundering Issues

Another side effect of current FOBTs is the increase in money laundering. Since the machines can take lots of money in just a few hours, they are an excellent tool for criminals to wash money that they have made with illegal activities such as drug sales. They could say they have been gambling that day.

In 2013 Coral was fined £90,000 by the Gambling Commission as he failed to flag a drug dealer who laundered close to £1 million in its betting shop. With an average payout of 90%, FOBTs are a great way to clean a high amount of cash. 10% is an acceptable price for criminals and gangs. To avoid being caught, they can even use a team of people and split the total amount to wash into smaller parts.

FOBTs V Online Slots

Cash_imagePeople that are playing online slots regularly might be asking what the difference between the games that you can play on FOBTs and those of online slots is. The main difference is ‘under the hood’ so to speak:

1 – An Online slots will give a return per player of around 96 to 99% while an RTP of FOBTs is between 90% and 94%.
2 – Online slots give more variety of stake lines as you can play as low as 1p and as high as £250. FOBTs do not have such flexibility as the minimum stake usually is £1 and the maximum is £100. The maximum payout is also limited to £500 while online slots can go as high as millions.

Fixed Odds Betting Terminal Risks

So if you love slots and thinking about giving Fixed Odds Betting Terminal a go, think again! In addition to that, online you will also find lots of offers that will increase your chances of winning further. Add to that online slots have thousands of different games available while FOBTs are just around 50 you can choose from.

With the new taxation that is coming in October 2019 the payout rates of online slots might reduce to around 90-95%: even in this scenario you will have a lot more options online and better offers that you will still be better off playing online slots vs FOBTs.